Uncertainty remains regarding the relative contribution of either abnormal insulin secretion or insulin action to the pathogenesis of noninsulin dependent diabetes mellitus. In this study we have examined the relationships between insulin secretion, insulin action and fasting glycemia in nondiabetic and noninsulin dependent diabetic southwest American Indians. We have quantified the insulin secretion by measuring the insulin and C-peptide responses after oral glucose and after a 24 hour standard diet of mixed composition. In vivo insulin action was estimated using the euglycemic clamp technique, with simultaneous indirect calorimetry, at both submaximal and maximal insulin stimulating concentrations. The results suggest that moderately increased fasting glycemia in nondiabetics, and in mildly hyperglycemic noninsulin dependent diabetics was primarily a result of a decrease in insulin action. Marked hyperglycemia in the diabetics occurred as a result of both decreased insulin action and decreased plasma insulin concentrations. Decreased plasma insulin concentrations appeared to be a result both of insufficient insulin secretion and increased insulin disappearance rates. We have hypothesized that the major results of decreased insulin action and decreased plasma insulin concentrations in the diabetics subjects were increased free fatty acid concentrations, increased fat oxidation rates, and increased flux of gluconeogenic substrates to liver, leading to increased glucose production and progressive hyperglycemia.